About 10,000 residential care facilities house more than 155,000 people, providing supervision and non-medical services.

Government does not pay directly for residential care, but it does impose a limit on what facilities may charge if the resident is an SSI/SSP recipient -- and, at about $23 a day, the limit means that facilities receive less than a motel that provides no service.

Rigid licensing distinctions make it difficult for facilities to offer services that would allow residents to age in place.

Finding 4: Regulatory changes have not kept pace with the changing role of residential care
facilities.

Residential Care Facilities for the Elderly (RCFEs) are a consumer-favored option for long-term
care because of the home-like setting, lower cost and individual freedom provided. Although
conceived as a non-medical approach to long-term care, their function has grown increasingly
complex as residents have been given the right to remain in place with greater and greater need
for care. While new regulatory categories have been added piecemeal to broaden the role of
RCFEs, no comprehensive re-examination of where this service fits in the long-term care
continuum has occurred. But as a key service that can keep people from premature
institutionalization and foster at least partial independence, RCFEs deserve attention and reform
that will support expanded availability to people with long-term care needs.

California has 5,234 licensed RCFEs with a capacity of 116,082. Another 4,691 facilities house
adults between the ages of 18 and 64, with a capacity of 39,259, and 23 facilities provide
residential care for up to 272 people with chronic life-threatening illnesses (largely AIDS). Thus
there are almost 10,000 facilities that house more than 155,000 people. These facilities range in
size from under six beds to more than 100 and in appearance from homes tucked away on
residential streets to apartment-like complexes on bustling streets. Nine or 10 is the average bed
size, but 70 percent are six beds or fewer.(94)

Residential care facilities provide a range of services that stop just short of medical care.
Services include providing meals, shelter, laundering, transportation, supervision of medications
and limited assistance with the activities of daily living (dressing, grooming, eating, bathing,
toileting and walking). Residents cannot be bedridden nor can they require 24-hour nursing care.
The facilities are responsible for the safety of residents, but residents are free to come and go as
they desire.

Among the issues raised regarding
RCFEs during this study were:

State policies regarding monthly
rates.

The growing difficulty of
determining what constitutes
service that requires licensing.

The problems with uniformly
regulating an industry that ranges
from under six beds to more than
100.

Restrictions regarding
medications.

Policies about evictions.

The lack of credible statistics on
RCFEs.

Going Rates

Unlike skilled nursing facilities,
the State is not a direct purchaser
of services in Residential Care
Facilities. But that has not
stopped the State from intervening
in the pricing structure for RCFEs.

RCFEs may charge whatever the market will bear -- but if the resident is an SSI/SSP recipient,
then the facility may only charge that person the SSI/SSP benefit rate minus about $90 for
personal spending. (Supplemental Security Income is a federal program of cash assistance to the
aged, blind and disabled who have limited income and resources. The companion State
Supplementary Program puts state funds into the mix.)

At current rates that means somewhat less than $700 per month -- or about $23 a day (as one
Commission advisory committee member commented, not even as much as a hotel charges).
This compares to monthly rates for non-SSI/SSP recipients that range from $1,300 to $2,000
statewide, with a median rate of $1,512 (the median is slightly higher in Northern California's
urban counties -- $1,850).(95)

The result of the disparity between the artificially limited $700 rate and the $1,500 median rate is
that facilities limit the number of SSI/SSP recipients that they will accept -- if any -- and then
subsidize care with higher private-pay rates than would otherwise be necessary. SSI/SSP
recipients, who make up about 30 percent of all RCFE residents, are used as "fillers" in facilities
with empty beds. Or they cannot find space at all in some Northern California counties,
according to consumer advocacy groups.

The state policy has had several unintended consequences. Families of SSI/SSP recipients, until
recently, were not allowed to voluntarily supplement their relative's ability to pay as a means of
procuring a better level of care or environment. This set them apart from people who could
afford to pay much higher rates and consigned them to finding care in RCFEs that often would
not have been their first choice. The State recently changed this policy, but now consumer
advocates fear that the "voluntary" nature of supplementary payments may turn into mandatory
"blackmail" -- or that discontinuance of such payments at any time might lead to evictions.

The policy of holding down rates for one group of people has also created a gap in who can
afford RCFE service. People who collect Social Security or pensions that are above the SSI/SSP
eligibility level but below the ability to fund private-pay rates -- roughly $750 to $1,400 per
month -- have no choices.

Several options have been offered by various experts:

The Institute for Health and Aging at UC San Francisco has suggested that restructuring the
RCFE rate system may require an increase in the basic SSP rate coupled with subsidizing
specific personal care assistance through Medi-Cal personal care benefits.(96) A different source
has suggested that such a subsidy could range from $500 to $1,400 a month.(97)

The Community Residential Care Association of California believes the federal government
should be lobbied to increase the federal portion of the SSI/SSP grant specifically for people
living in licensed community care facilities.(98)

Others have suggested providing half of the state-paid skilled nursing facility rate to purchase
care for RCFE residents who would otherwise be placed in skilled nursing homes at state
expense.

For many people, residential care facilities are a last stop before skilled nursing facility
placement, the most costly service from the State's perspective and the most restrictive level of
care from the consumer's viewpoint. Restructuring the way RCFEs are paid is one route to
increasing their availability as a community care resource.

Licensing Categories

The people who operate RCFEs cite two factors with the potential for affecting their industry
negatively: competition from other forms of housing that assist people but that do not have to
obtain licensing, and complications from the Americans With Disabilities Act. Consumer
advocates worry, as well, about unlicensed operations that may promise lots of care, fail to
deliver when it is needed and then be accountable to no one since they are not within the purview
of community care licensing. And policy makers are concerned about the licensing barriers that
may prevent the expansion of living arrangements that are community-based and capable of
keeping people from deteriorating to the point of needing skilled nursing care.

Care, supervision, case management -- these are the concepts that make a facility fall under the
residential care facility licensing requirements. But some forms of independent living housing
and congregate living facilities offer assistance with a variety of functions: meals, transportation,
housekeeping and social activities. The key difference lies in whether a facility provides
assessment, linkage to services and other actions designed to meet a resident's specific needs.(99)

A facility can be deemed an unlicensed RCFE if it accepts or retains residents who demonstrate
the need for care or supervision. To become licensed, a facility would need to meet standards
that include a pre-admission appraisal, prohibiting residence by people who are bedridden or who
cannot self-administer medications, providing an admission agreement outlining specific services
and meeting increased building and fire safety requirements.

Because meeting these requirements can be expensive, assisted living facilities may try to avoid
crossing the line by providing too much service. This, in turn, may mean that people cannot
remain in their present living arrangements when their condition requires more assistance. A
Senate Office of Research report in 1993 cited the confusion over when community care
licensing standards kick in as a deterrent to the development of more community-based assisted
living arrangements.

In addition to these concerns, the RCFE industry sees a legal conflict between state regulations
that require them to reject some people as residents -- those with excessive medical needs --
when the Americans With Disabilities Act requires no discrimination and "reasonable
accommodations" for people with needs that are not met by normal operations. Industry
advocates cited this as an area that may move into the courts in the future, especially if family
members vigorously oppose the removal of a resident whom the State has deemed unsuitable for
RCFE care.

As long-term care options develop and providers move to arrangements that offer integrated care,
the lines between licensed and unlicensed care may blur. While expansion of options is a top
priority, protection for consumers remains a concern. These two goals may require a fresh
assessment of how licensing standards are applied in community-based settings.

A Matter of Size

Regulating facilities that range in
size from under six beds to more
than 100 presents the State with
challenges. The State's top goal is
to oversee quality of care for
residents, not to protect the
industry or nurture struggling
businesses. But because of the
growing numbers of citizens who
need out-of-home assistance, the
State does have a legitimate
interest in maintaining and
expanding accessibility to this type
of care.

RCFE operators and other care
providers who served on the
Commission's advisory committee
said that small facilities have
difficulty complying with
regulations that are often written
with much larger facilities in
mind. Few regulations make a
distinction between what is
required of various sizes of
facilities.

Advisory committee members
from the industry also complained
that the Department of Social
Services performance in
overseeing RCFEs is erratic.
Policies may be interpreted
differently by different regional
offices and the attitudes and
actions by individual analysts
assigned to an RCFE are not
always consistent. They also
noted that they have far fewer due
process safeguards than do skilled
nursing facility operators who are
overseen by the Department of
Health Services. And they were
particularly critical of the lack of
assistance available to a facility
that wants to comply with
regulations but has difficulty
understanding the State's
requirements.

The Department of Social Services, however, is recovering from several years of deep personnel
cuts and has embarked on a course of standardizing policies and providing intensive training for
the people who inspect RCFEs. The Department also has an interdisciplinary team that reviews
appeals of inspection findings. In addition, policy makers recently provided the funding for the
Department to double its tiny staff of technical assistance personnel -- the unit that can provide
help to RCFEs in understanding what actions must be taken to comply with state regulations.

While the State does not need to take on the responsibility of incubator to develop high-quality
RCFEs, it can play an important role in improving the quality of care in an industry that is
disproportionately made up of small businesses with few resources. The Department of Social
Services was undergoing a review of regulations to streamline processes and eliminate
unnecessary rules as this report was being written. Many of the people who participated in this
study believe a positive outcome of that effort would include treating small RCFEs separately
with due consideration for their size.

Other Issues

Other issues raised during the course of the Commission's study included medications, the
eviction process and the lack of solid information about RCFEs.

Medications: RCFEs can assist with medications, but not administer them. For instance, an
RCFE may remind a resident that it is time to take their medication and have a safe, locked area
where medications can be stored and tracked. But it is up to the resident to actually take the
medication, measure it out if that is necessary and in other ways control the process.

Several RCFE operators complained that the restriction against RCFEs helping with medication
is so broad that aspirin and over-the-counter cough medicines cannot be provided without
specific, event-by-event doctor's authorization. This may make a middle-of-the-night cough or
headache difficult to cope with.

Consumer advocates expressed concern that RCFEs not slip into a category that might allow
them to influence whether chemical restraints -- psychotropic drugs -- are administered, an area
that has been a problem in skilled nursing facilities and that has led to strong informed-consent
provisions for residents. Recent studies indicate that RCFE residents take a large number of
drugs. More than one-third use at least one psychotropic drug and 10.5 percent take two to four
different psychotropic drugs.(100)

Many academic studies have shown that the elderly are particularly prone to misuse of drugs and
unmonitored combinations of drugs that may threaten their health. But loosening regulations
regarding limited types of over-the-counter medications made sense to many people on the
Commission's advisory committee.

Evictions: Consumer advocates say that tenants have more protection from their landlord's
evicting them than RCFE residents do from a facility forcing them to relocate. They pushed for
legislation in 1996 that would have applied standards similar to those that are used in skilled
nursing facilities: that a resident only be evicted for failure to pay or if his stay is a danger to
health and safety. The measure also would have required facilities to inform residents of their
right to contest evictions.

RCFE operators argue, however, it is to their advantage to keep a facility full so business
pressures keep unnecessary evictions from occurring. They say that state regulations give them
very little protection from residents who damage facilities or who persist in disruptive behavior.

This is a particularly sensitive area for small RCFEs. Since small facilities offer a home-like
environment, it is important for a resident to be a good "match" for the operator and the other
residents. Operators said it is sometimes difficult to tell upon admission whether someone will
fit in. But usually within a few weeks, problems will surface if they are going to.

Based on anecdotal evidence, it appears that regulations in this area are neither strong enough nor
clear enough to protect both the consumer and the provider.

Information: Academics who study gerontology issues and try to provide accurate data to
policy makers say there is a lack of information about long-term care for the elderly in general
and Residential Care Facilities specifically. In skilled nursing facilities, residents' condition and
attributes are recorded in the federally required Minimum Data Set (although at this point the
data is not routinely turned over to the State where it can be shared with researchers). Nothing
similar is required of RCFEs, although regulations do require them to make a pre-admission
assessment of each resident.

Filling in this gap of knowledge could be accomplished in several ways:

RCFEs could be asked to provide resident-specific data or aggregate data once a year to the
Department of Social Services.

The federal government could be asked to amend its methods in the Census count and the
annual American Housing Survey to require separate questions about people living in RCFEs and
other types of assisted living facilities.

Summary

Residential care facilities are a critical component of the community-based efforts to keep people
with long-term care needs in home-like environments. But these types of facilities receive far
fewer resources, state attention and encouragement to deliver services in creative ways than is
necessary to ensure that their potential is maximized. Policy makers can take several steps in the
area of rates, licensing and operations to enable RCFEs to make a larger contribution to
providing long-term care options.

Recommendations

Recommendation 4-A: The Governor and the Legislature should restructure
state policies regarding RCFE rates.

With market forces driving prices for 70 percent of the residents in RCFEs, state policies to
artificially suppress rates for SSI/SSP recipients have had counterproductive affects, including
lack of access. In addition, many people who are not poor enough for SSI/SSP benefits but too
poor to pay $1,500 a month are left with no options for out-of-home care other than expensive
skilled nursing facilities. Policy makers should take several steps:

Eliminate the ceiling on the rates RCFEs may charge SSI/SSP recipients.

Petition the federal government to increase SSI.

Increase the state-funded SSP portion of the monthly benefit.

Craft a Medi-Cal benefit using the personal care waiver that will allow RCFEs to collect
money for services beyond food and shelter that help keep residents out of skilled nursing
facilities where the Medi-Cal bill would be much higher.

Recommendation 4-B: The Governor and the Legislature should revamp the
regulatory structure for RCFEs.

An earlier recommendation calls for the complete restructuring of licensing to allow more
flexibility and integration of long-term care services. This is particularly true for RCFEs, which
would benefit from regulations that are size-specific and that more easily accommodate add-on
services to a core package of basic care.

Recommendation 4-C: The Governor and the Legislature should encourage
more clarity and consistency in enforcement efforts by dedicating more
resources to staff training and enhanced technical support services.

Fairly enforcing regulations that avoid micromanagement and encourage innovative approaches
requires state staff who are trained and kept abreast of state-of-the-art developments in long-term
care. And the potential for high quality of care is enhanced by sharing with facilities the State's
expertise on best methods and practices for complying with regulations.

Recommendation 4-D: The Governor and the Legislature should revise
restrictions on RCFE medication practices while at the same time safeguarding
consumer protections.

The elderly are a population that is already at risk for over-medication and incorrect usage of
medication. But a system that requires event-by-event phone calls to physicians for permission
to provide residents with over-the-counter cough medicine and aspirin seems to serve no one's
best interests.

Recommendation 4-E: The Governor and the Legislature should couple a
strengthened process for protecting residents from unwarranted evictions with
the creation of a limited probation period when a resident can be asked to move
without cause.

While residents should be protected from summarily being forced from a facility, RCFEs also
should have tools at their disposal to ensure that residents can live together comfortably.

Recommendation 4-F: The Governor and the Legislature should request that
the federal government restructure its health information collection process to
include specific data on residential care facility residents.

The federal government should be encouraged to use the Census process to collect data on people
who live in different types of out-of-home arrangements. In addition, the federal government's
American Housing Survey suffers from the problem of lumping together everyone who lives with
more than five unrelated people (including college dorms and half-way houses) rather than
examining information by specific categories.